Citigroup Inc directors ousted Chief Executive Officer Vikram Pandit after concluding that he had mismanaged operations, leading to setbacks with regulators and a loss of credibility with investors, a person with knowledge of the discussions said.
Episodes that led the board to replace Pandit with Michael Corbat included the March rejection by regulators of a plan to boost shareholder payouts, said the person, who requested anonymity because board deliberations are private.
Citigroup’s $2.9 billion writedown on the Smith Barney brokerage unit and a two-level cut of its credit rating by Moody’s Investors Service contributed to the decision, the person said.
Directors have discussed whether to replace Pandit for months, even before the April departure of former Chairman Richard Parsons, the person said.
Corbat enjoys a better relationship with Citigroup’s regulators than Pandit as a result of his experience as head of Citi Holdings, the division that contains the lender’s unwanted assets, the person said.
Corbat, 52, “is a proven, hands-on leader who is known for his focus on enhancing productivity, holding people accountable and practicing sound risk-management,” Chairman Michael E O’Neill said in on Tuesday’s statement. “He has consistently delivered impressive bottom-line results at many of our major global business units.”
The ousting of Pandit, 55, and Chief Operating Officer John P Havens, 56, came six months after O’Neill, 65, replaced Parsons as chairman of the bank, the third-biggest in the US by assets. Shannon Bell, a spokeswoman for New York-based Citigroup, declined to comment on the change and O’Neill didn’t respond to emailed inquiries.
“We will be relentless in our drive toward operating excellence and risk management,” Corbat said in on Tuesday’s statement.
O’Neill’s frustration with Pandit played a role in the CEO’s departure, according to the person.
